Fed Expects Faster Growth, Lower Unemployment Next Year

The Federal Reserve projects that the unemployment rate could fall to 6.5% in 2014, a threshold it has conditionally set to begin raising interest rates.

Still, most Fed officials expect to hold off on a rate increase until 2015, according to assessments of monetary policy for the coming years that showed 15 of 19 officials expect the first tightening will come that year.

The latest unemployment and economic-growth forecasts for 2014 are an upgrade from the last set of estimates, made in March. The projections reflect officials’ expectations and hint at their next monetary-policy moves.

The central bank’s economic and monetary-policy projections, released Wednesday, are based on the responses of the 19 members of the policy-setting Federal Open Market Committee.

The forecasts are updated in conjunction with the Fed’s FOMC meeting held Tuesday and Wednesday. A policy statement follows each meeting.

The Fed is mandated with maintaining stable prices and maximum employment.

For 2014, Fed officials boosted their outlook on gross domestic product growth to 3.0% to 3.5%, versus a 2.9% to 3.4% estimate made in March. Unemployment is seen falling to 6.5% to 6.8%, versus an earlier projection of 6.7% to 7.0%.

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